NZD/USD clears the 2022 low (0.5512) as it carves a series of lower highs and lows.
By : David Song, Strategist
New Zealand Dollar Outlook: NZD/USD
NZD/USD clears the 2022 low (0.5512) as it carves a series of lower highs and lows, and the Reserve Bank of New Zealand (RBNZ) meeting may keep the exchange rate under pressure as the central bank is expected to deliver a 25bp rate-cut.
NZD/USD Clears 2022 Low Ahead of RBNZ Rate Decision
NZD/USD tumbles to a fresh yearly low (0.5507) as US President Donald Trump plans to impose an additional 50% tariff on China, and the threat of a trade war may continue to drag on Asia/Pacific currencies as it clouds outlook for global growth.
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In turn, a further decline in NZD/USD may continue to push the Relative Strength Index (RSI) towards oversold territory, and a move below 30 in the oscillator is likely to be accompanied by a further decline in the exchange rate like the price action from last year.
New Zealand Economic Calendar
At the same time, the RBNZ meeting may drag on the New Zealand Dollar as the central bank is projected to lower the official cash rate (OCR) to 3.50% from 3.75%, and acting-Governor Christian Hawkesby and Co. may continue to strike a dovish forward guidance as ‘an increase in trade restrictions is likely to reduce economic activity in New Zealand.’
In turn, the RBNZ may reiterate that ‘if economic conditions continue to evolve as projected, the Committee has scope to lower the OCR further through 2025,’ but the central bank may show a greater willingness to pause its rate-cutting cycle as ‘monetary policy cannot offset the long-term negative supply-side effects of higher barriers to international trade.’
With that said, a shift in the RBNZ’s forward guidance may curb the recent selloff in NZD/USD, but the exchange rate may attempt to test the 2020 low (0.5470) should the bearish price series persist.
NZD/USD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; NZD/USD on TradingView
- NZD/USD reverses ahead of the December high (0.5919) to register a fresh yearly low (0.5507), and a close below the 0.5512 (2022 low) to 0.5520 (38.2% Fibonacci extension) zone may push the exchange rate towards the 0.5420 (50% Fibonacci extension) to 0.5470 (2020 low) zone.
- Next area of interest comes in around 0.5320 (61.8% Fibonacci extension), but the recent series of lower highs and lows may unravel if NZD/USD struggles to close below the 0.5512 (2022 low) to 0.5520 (38.2% Fibonacci extension) zone.
- Need a move back above 0.5650 (23.6% Fibonacci extension) for NZD/USD to negate the bearish price series, with a break/close above the 0.5740 (78.6% Fibonacci retracement) to 0.5760 (100% Fibonacci extension) region bringing the monthly high (0.5853) on the radar.
Additional Market Outlooks
Euro Forecast: EUR/USD Completes Cup-and-Handle Formation
GBP/USD Pulls Back to Keep RSI Out of Overbought Zone
Canadian Dollar Forecast: USD/CAD Selloff Persists as PM Carney Pledges to Fight Trump Tariffs
USD/JPY Selloff Pushes RSI Toward Oversold Territory
— Written by David Song, Senior Strategist
Follow on X at @DavidJSong
Click the website link below to read our Guide to central banks and interest rates in 2025
https://www.cityindex.com/en-au/market-outlooks-2025/FY-central-banks-outlook/
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